I continued the conversation with the store duty manager and she said the best she can do is take 25% off the replacement handset price of AUD$800 (or close to it). I was not about to pay an additional $600 for my phone after paying $1600 for it not too long ago.
She gave me a few other options but the outcome of those would most likely be no replacement due to liquid damage.
I was completely honest with her and said “I understand this isn’t you making the policy, but I feel misled and like there is a bit of false advertising going on here. You can’t just make a statement and then choose not to cover it under warranty” she apologised again and I said that’s fine, I understand it’s not her. I told her I would be filing a complaint with NSW Fair Trading (consumer protection department in my state) because of the misleading statements made by Apple. She said that’s good and she hopes I get the outcome I want… More here.
Apple does come over very stringent with regards to policy when it comes to repair, but you can fight and you may win. I found this out when my wife’s Apple Watch was replaced for free.